Long-awaited SEC approvals of specific Bitcoin exchange-traded funds (ETFs) created high anticipation in many financial circles recently. Many experts in the cryptocurrency arena are saying that such developments could actually begin to re-shape the entire financial industry. Digital currency trading may have begun as began as fringe activity, but with the SEC nod, crypto just received a major mainstream boost. While many veterans in crypto wonder if the original philosophy of a digital currency that empowers holders by offering a decentralized framework that operates outside of the traditional financial system is fading, what is undeniable is that the recent developments pertaining to ETFs create a greater sense of legitimacy and credibility because nearly everyone seems to agree the path is now open for traditional investors to interact with digital assets within a regulated and familiar structure.
However, this new tide should lift the Web3 boat as well, given that the economy through community mantra of the space rests heavily on digital currencies and digital assets. This will affect all industries dabbling in the Web3 space, but the intersection of this arena with the entertainment industry could hold particular opportunities.
Indeed, a large part of the allure of Web3 is about sharing rewards between and with the users within a larger experience. Web3 is a new version of the internet that is based on blockchain technology, digital monetization and trading/sharing, oftentimes mixed with an immersive vibe. The premise is that this is all done without the current stronghold tech giants have traditionally exerted. This is why, according to Coinbase, that Web3 adoption is predicted to increase by 50% over the next three years.
Part of the psychology in the adoption is tied to a sense of membership, whether ephemeral or lasting, where different members in specific communities have access to items and/or experiences based on digital assets/currency they acquire. The focus is on collecting, trading, and incentives all around experiences both on- and/or offline. An example in the consumer packaged goods sector is that of Starbucks tokens for access to various “drops,” memberships, events and more. However, given the “experience” portion of the equation, many are placing bets that the most innovative use cases will continue to spring from the entertainment industry.
Already has Mastercard tapped the music scene for an attempt, though the reach was minimal due to the lack of a true growth strategy coupled with the lack of a deeper understanding of real music industry dynamics. Similarly the Mark Cuban-invested Fireside Web3 startup aimed at the entertainment industry has also not generated massive awareness nor adoption to date. But now such projects may have the mindset opening for which they have been waiting.
There are both renewed and new opportunities for endeavors with the great management teams who can truly connect the dots whether they be entertainment giants, creative networks, or agencies. While re-shaping event ticketing in a Web3 mold in order to alleviate the reselling woes that have plagued the industry is powerful, there is also a real opportunity in applying storytelling to Web3 sensibilities. Such elements could include rewards linked to engagement with the story, audience contribution to writers’ room on shows, virtual backstage access at concert, governance, tracking, and more.
Watch for startups in this space that may either act as independent disruptors or as partners with established corporations to increase the value of the latter as in the latest announcement from Warner Bros Discovery in hopes that consistent perfection of such moves drives stock. In the case of the former instance, Web3 is actually creating its own media environment with competitive compensation and less structure in companies like Film.io that are beginning to rival major studios by deleting the corporate oversight that is a traditional burden in the industry.
Simultaneously, mavericks like Theta Labs are helping established Hollywood players better navigate the new era by providing Web3 tools that can be used to enhance entertainment that deepens engagement. The overall budding sector presents a monumental opportunity since content expected to grow by $1.4 billion by 2026, and with new devices on the horizon, one can be sure that the number of hours of screentime will only increase, which will mean more opportunities for a multitude of transactions.
Essentially, the new era is about building out fandom in a more interesting way with Web3 tooling that is seamlessly integrated. Now, as discussions include digital assets and digital currency are becoming even more acceptable, the competitive advantage will lie with those who are can not only build on top of experiences in a way that only digital currency can do but also do so by communicating organically about the opportunity in a way that is accessible to consumers-at-large. Market share will go to those who develop the best flywheels around these new platforms first.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.